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30 Sep 2015 
{How Forex Brokers Really Make Money

By Alex Bowman, CFA - August 27, 2015

Most Forex brokers aren't your traditional financial intermediaries found on Wall Street. When operating in international currency and CFD markets, full understanding of the structure and strategic objectives of Forex brokers may mean a difference between success and utter failure for a trader. There is much more to the subject than just transparency of commission structures and hidden costs. Knowing how to spot a truly professional brokerage solution, which will serve your interests instead of stuffing their own pockets with your money, will go a long way in safeguarding your capital.

Dangerous Business Model of Market Making, or B-Book

What is the business model of most Forex brokers, how do they operate and make money? What are the fundamental differences from traditional structures that equity investors are used to?

There is only two business models among the thousands of brokers globally. The first and most commonly used model is known as market-making, or B-Book. Whether regulated or not, such brokerages present the greatest risk of financial losses and missed profits to clients. B-Book is a technical term, which implies that provider will virtually execute trades without sending them to live markets. Such methodology allows the virtual broker to keep all trades on the books, acting as counterparty to every transaction under assumption that the prevailing majority of clients will eventually lose all money. Client loss here becomes broker gain, and vice versa.

forex broker

You may have read numerous reports with trader complaints covering a variety of manipulative broker techniques they encountered when trading in Forex and CFD markets, including stop-hunting, forced delays in trade executions, unjustified price spikes, artificial gaps, unexpected slippage and drastic surge in spreads, among the many other shady practices that witnesses report. The chances are, few would know the underlying reasons behind such broker behaviors. In reality, it all comes down to the factors of opportunity and financial incentive. Since their profitability and the very financial survival is driven by client losses, such brokers tend to misuse the technical facilities of B-Book systems, interfering with client trades, manipulating execution and even dressing up price quotes to maximize their own profits.

Unfortunately, as practice shows, even regulated brokers are prone to these abuses. The reality of things and practical experience of investors with market makers show that there is no such thing as a reputable B-Book broker, while the business model itself is fundamentally skewed to benefit the broker at the expense of the client.

Let's have a look at actual numbers. We reviewed a screenshot of a system employed by one small-sized B-Book broker that went out of business recently, deciding to share this valuable information with investors. Profitability of this broker with only three employees is mind-boggling. Truly so, they make money from thin air. Daily trade report of this broker shows that clients altogether lost astonishing $195,000 in one day of trading. B-Book broker will transform these virtual client trades, where no actual market trading occurred in the first place, in broker's own profits. The very next day, these funds are being used to pay for even more advertising, selling the concept of easy money to trusting investors. This is precisely why the brokers that have some of the highest online visibility due to heavy advertising, use B-Book models, while professional ECN brokers have relatively small presence online and advertise their offers within reasonable budgets. High competition for advertising spots saw brokers' marketing costs skyrocket, and it is generally the case that only market-making B-Book brokers, who essentially use client money to pay for advertising, are able to afford the cost.

Scary consequences of B-Book business models

Most common grey techniques used by B-Book brokers are presented in the screenshot that follows. You can clearly see that brokers have the technical means to force execution delays, damaging client accounts when traders may need to exit the market urgently on huge price swings. They can and often do disregard stop-loss requests, or execute orders at inferior prices, take client money from positive slippage, artificially inflate spreads, and utilize other complex tools to guarantee broker profits. These systems are not designed to provide honest brokerage services, and are not aimed at long-term customer satisfaction. All they are meant to do, is maximize client losses for maximum broker rewards.

Worst of All, This Could Actually be Legal, Even for Regulated Brokers

Curiously enough, most of the manipulative techniques discussed above could be perfectly legal, even for regulated brokers registered and operating in reputable jurisdictions. This is the case because according to client contracts, which are the terms and conditions that customers accept online when opening Forex broker accounts, are drafted with full disclosure of the market-making role of the broker. According to these agreements, brokers act as exclusive dealers for all Forex and CFD trades, and legally have the right to offer the kind of execution they deem acceptable under circumstances. If the circumstances are such that the client is making money, it may just be in the best interests of the broker to put a stop to the winning trades and reverse gains. If it is perfectly legal to do so, there might as well be no stopping the broker from doing it.

Alternative DMA/STP solutions for professional traders

DMA/STP, often referred to as simply ECN brokers, pursue best interests of their clients in contrast to the above practices. Also known as A-Book brokers, DMA/STP firms operate solid brokerage businesses as they are meant to be. Equipped with technical means to deliver absolute best trade execution, DMA/STP brokers are driven by client-centric business models, which motivate them to continuously improve their services, reduce trading costs and provide solutions that help traders achieve better results. DMA/STP brokers will deliver true market prices and route all client trades to international banks and other liquidity providers through ECN environments. Concord Bay is one example of an international brokerage that operates according to a 100% DMA/STP business model, in a fair and transparent business relationship where broker is motivated to help clients succeed in the markets, growing trading volumes and facilitating client profitability a win-win relationship.

The Bottom Line

If you ever thought of making money with a market-making broker, you might as well forget it altogether as the chances of your dreams materializing are next to none. The only viable brokerage solution for professional Forex and CFD traders is one where broker's financial motivation is tied to client success, with a commission-based compensation instead of the more common B-Book model where broker makes money on client losses. DMA/STP firms, like Concord Bay, also known as A-Book brokers, cater to professional traders and investors, delivering superior execution and first-rate electronic trading services structured to facilitate success of their clients.|ECN, STP and DMA Forex and CFD Brokers Versus Market Makers

Differences in Business Models and Why It's Important

By Shawn Bailey, Hawk & Campbell Securities, June 12, 2015

Every Forex trader, whether an expert in day trading or a long-term currency trading visionary, is in a constant search of one top Forex broker that provides not only best trading technology, but also stability and confidence of a bulletproof online trading platform. Picking the right partner for your online trading is a question of knowledge and deep understanding of underlying business models that govern every step your Forex broker takes.

This article investigates the two predominant business models in online brokerage of market-making and straight-through-processing (STP), explaining critical subtleties in Forex dealing that are often ignored by traders and investors alike. Knowing this information will help you make informed decisions when picking the one most important partner in your online trading Forex career - your Forex broker.

ecn brokers

Who are Forex Market Makers, and Why They Are, Well, Dangerous

Forex market makers essentially take the other side of your trade, every time you click Buy or Sell. For instance, if a Forex client buys one lot of EUR/USD at 1.12 and the client’s broker is market maker, they sell one lot of EUR/USD back to you at 1.12. In other words, market maker bets against the client. In a zero-sum game on global currency markets, only one side of the trade wins, and market maker is no different than a massive Forex casino that is so big, it can wait indefinitely until clients lose all money, Forex accounts drain all funds, and market making broker walks away with the profit.

Forex market makers will deploy a dealing desk that manages their exposure to profitable clients, using automated and manual methods to monitor all Forex trades that flow through their systems. Should a client start making money, and we are not talking here about a single lucky trade, but a consistent pattern of winning, such Forex broker may deploy extremely efficient tools that will intervene in trading execution processes, turning the bets in broker's favor.

Straight Through Processing - STP Brokers and Direct Market Access (DMA) Approach

Unlike market makers, DMA/STP brokers don't trade against their clients, but rather send every Forex trade to the interbank market. STP Forex brokers are interested in a prolonged relationship with the client since Forex broker's own financial results are driven by commissions that their clients pay. Financial motivation that this approach creates generally means considerably better trading conditions, low Forex spreads and quick trade execution without any Broker manipulation.

In addition, the DMA/STP/ECN model makes expensive dealing desks irrelevant and unnecessary. This removes extra costs from the company's financial structure and reduces expenses for Forex traders. Top STP brokers are interested in satisfaction of their clients and high customer retention rates. Thus, they tend to lower trading costs as much as possible and offer value-added services to assist their clients.

It is important to note that while both DMA and STP are business models, Forex ECN is a kind of technology that may or may not be used by STP brokers for best results. There is a slight difference between DMA and STP. While deployment of both business models will make your Forex broker send trades to interbank or other liquidity providers, STP brokers may add a slight mark-up on spreads that you see in your Forex trading platform. Combined usage of straight through processing approach and DMA pricing, on the other hand, provides online traders with true interbank quotes at all times for maximum transparency at absolute lowest trading cost. DMA and STP brokers will generally provide variable spreads and true market pricing that dependably reflects the state of interbank foreign currency markets.

In contrast to the above, a market maker is likely to offer fixed or "capped" spreads at certain limits. In comparison, an ECN or STP broker cannot and logically will not utilize such pricing model, since in doing so the firm automatically becomes a market maker, using its own risk-capital to create artificial demand for client trades. True STP brokers do not bet against their clients.

ECN Brokers and Electronic Communications Network Technology

ECNs generally include many liquidity providers (LPs). LPs simultaneously submit quotes to the ECN and the system aggregates Forex price quotes to show best bid-best offer, with minimum spread for each transaction. With true ECN, traders enjoy minimum spreads that often go down all the way to zero.

Both DMA and STP brokers maintain complex Forex liquidity networks that vary in their quality, size and diversity of trading partners. By diversifying their liquidity pools via ECN technology, DMA/STP brokers ensure that client trades are sent to liquidity providers and the global Forex interbank market, while paying these LPs a preagreed transaction fee, or commission. STP brokers arrange liquidity with various banking partners and institutional liquidity providers, creating a competitive environment on a single ECN Forex platform where various suppliers stream their best Bid and Ask prices, competing for the business of retail customers. ECN is a trading technology that powers up the price-matching engine of DMA brokers, selecting best prices for Forex traders at any given point in time in a highly efficient, streamlined automatic environment.

False STP/DMA Brokers and How to Spot Them

With STP/DMA/ECN Brokers gaining popularity among online currency traders, many companies nowadays misrepresent their offers and position the more common market-making trade execution as ECN platform. We will leave the judgment on the ethics of such misrepresentation, and instead emphasize red flags that will help Forex traders spot the lie and distinguish a true ECN broker from a market-maker.

1) True STP/ECN Forex broker will never offer you bonuses or no-deposit live accounts. Recall that STP brokers are in business of only matching your trades with real interbank liquidity for a commission. Only market makers who expect you to lose all funds will offer free money, while a live brokerage with global banking partners doesn't engage in casino-like behaviors.

2) DMA brokers don't want you to and don't expect you to lose your money, so they will not employ predatory tactics, such as unreasonably high leverage, forced timeouts, price spikes, gaps, won't forbid automated trading or scalping, and won't resort to other limitations to stop you from effective trading.

3) STP brokers will not promise you easy millions or offer freebies, such as free education, trading signals or falsely-profitable expert advisors, all of which are completely worthless anyway. True STP/DMA/ECN brokers will invest in their technology and cater to experienced, professional Forex traders who already know the differences in broker business models and can spot the rotten apple.

Recommendations for Professional Forex Traders

Forex brokers are in the midst of a revolution. Direct Market Access, Straight Through Processing, and Electronic Communications Networks are making an extraordinary impact on broker operations, lowering transactional costs for Forex traders and drastically improving performance of trading systems. Combining the best in trading technology and interbank Forex liquidity, the 100% DMA/STP/ECN business model is a no-brainer when it comes to selecting your Forex broker.

Concord Bay offers a true 100% DMA/STP/ECN platform to both large institutional investors, other Forex brokers and smaller retail clients. The firm aggregation technology matches liquidity from 50+ tier-one banks and institutional providers, offering lightning fast execution of 3 ms or less, spreads as low as 0.0 pips, amid full broker transparency and with full commitment of a true agency model. Concord Bay clients are free from traditional broker pressure or manipulation. Here is basic information every trader needs to know:

DMA Advantages to Traders, and Why Concord Bay stands out in the crowd:

1) There are no discriminatory rules or predatory practices against any trading system or style. Broker and trader interests are aligned. Every trading system is welcome, including high-frequency trading and automated expert advisors, news trading and scalping.

2) Concord Bay offers requote-free environment.

3) No price manipulation, and no spread mark-up - only true interbank quotes at all times.

4) DMA broker works for the client and not against the trader. Conflict of interest is finally out of the picture.

Concord Bay is a true DMA/STP/ECN Forex broker built to promote the integrity of Forex trading with the best interests of Forex traders in mind. Visit to learn more.|ECN Forex Broker And STP Brokers - How They Operate and Why It's Important

By Shawn Bailey, Hawk & Campbell Securities, July 21, 2015

Much has been said on the subject of various business models that drive one Forex broker practice or another. You must by now already know what in theory is an ECN Forex broker, and how straight-through-processing, or STP, is drastically different from market-making brokers. With all this material accumulated in the diverse landscape of the world wide web, numerous articles are failing one after another to answer one basic question. Why is this knowledge important to Forex traders?

Choice of a True ECN Broker is the One Most Important Decision in Your Forex Trading Career

So, what are the implications of trading in foreign currency markets with a common market-maker, as opposed to a choice of a true ECN broker?

ecn broker
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29 Sep 2015 

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29 Sep 2015 
Tired Of Struggling Skin? Here is Howto Take Care Of The Glow.

One of many major esthetics conditions that individuals have is once they have oily skin and can not discover a way to care for it. This generally leads to standard outbreaks, together with skin that becomes too shiny. While pores are plugged, new oil backs-up underneath the skin causing the dreaded acne. Because it becomes desperate when it meets the skin occasionally makeup does not use well. Comprehend you need a distinct approach to your skin than those with skin or dried if you're anyone who has to combat the oils. This representative acts as a micro-sponge to digest the fat from your own skin for about 8 hours.

Having an obvious understanding of all these capabilities goes to make it feasible for one to prescribe the proper products for someone who has greasy skin, a long way. In conclusion, in case you are going to be described as a beautician, it is necessary that in case your enterprise probably will thrive how to deal with oily skin you prepare to take care of all types. Greasy skin is very difficult to manage, and also happens to be among the most frustrating kinds of skin for many people. Oily skin simply suggests there is a different set of problems to cope with than those that happen with skin.

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29 Sep 2015 
Taprite Dual Tension Rural Support CO2 Regulator

Lately exposed a new type of TapRite alcohol extras that are accessible through their site. The regulator will continue to work perfectly fine once you've discovered the correct stress however it will take some learning from your errors to acquire it altered. Each regulator has a Sentry shutdown protection built into your body that immediately defends the dispensing technique in the unlikely celebration of regulator failure or failure. The regulator I was utilizing for the Shiner Bock always had the beer turn out foamy and smooth.

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29 Sep 2015 
5 Things You Should Know About Carpet

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